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Skadden Takes Key Role in Nixing BP/Rosneft Alliance

Posted by Brian Baxter

A three-member arbitration tribunal in Stockholm last week blocked a $16 billion joint venture between British oil giant BP and Russian government-owned energy colossus Rosneft to explore for oil in the Arctic Circle.

BP and Rosneft in January agreed to form an alliance to explore for oil off Russia's vast Arctic coast. The deal saw Magic Circle firms Linklaters and Freshfields Bruckhaus Deringer advise BP and Rosneft, respectively. But BP, which already owns 50 percent of Russia's third-largest oil producer, TNK-BP, ran into opposition from other shareholders in that enterprise.

The ensuing dispute pitted the oligarchs against BP and Rosneft chairman Igor Sechin, who also serves as deputy prime minister of the Russian Federation. Legal Week reports that Linklaters litigation chief Michael Bennett in London advised BP in the arbitration with AAR.

The arbitration panel in Stockholm upheld the previous injunction issued by a British court, which put on hold the $16 billion agreement between Rosneft and BP. The panel did not rule on whether an $8 billion share swap--the largest between a private and state-controlled company in the oil sector--could proceed. AAR claims it should also be stopped on the grounds that it is a "strategic investment," Legal Week reports.